As a financial economist, I teach my students about the business case for closing the education opportunity gap and striving for a diverse labor force. In a nutshell, given a globalized world, comprised of a melting pot of ethnicities with different tastes and preferences, it would be risky to create and invest in products designed for a homogeneous population. Investment portfolio theory teaches us that if you spread your investments across different asset classes, your risk exposure will be minimized. Investing in a diverse pool of assets that include domestic stocks, bonds, short-term investments, international stocks, and a variety of funds, helps mitigate the downside of the market. The benefits of a diversified investment portfolio come from the fact that not all assets in the portfolio will be correlated to the overall economy in the same way. When some asset values go down and others go up in the portfolio, the net negative impact can be completely or partially offset. This set of inverse correlations in your portfolio, contribute to a stable and profitable investment portfolio.
